xrpl

As 2026 begins, the XRP market is increasingly defined by a sharp and unusual split, creating two very different realities that coexist—but rarely intersect.
On one side, XRP trading wrapped in institutional structures is accelerating. This layer is supported by shrinking exchange supply, growing ETF adoption, and expanding enterprise-grade infrastructure. On the other side, the core on-chain economy of the XRP Ledger (XRPL) is flashing multiple warning signs, with declining user activity and weakening liquidity—even as Wall Street’s involvement continues to expand.
This divergence paints a complex investment landscape, where financial demand for XRP is becoming increasingly detached from actual usage of the XRPL network.
While XRP as an asset benefits from favorable supply dynamics and a clearer regulatory environment, the blockchain behind it is struggling to retain users, capital, and organic economic activity. The result is a market caught between potential supply shock and an on-chain ecosystem at risk of hollowing out.
The Bullish Case: A Structurally Tightening Supply
The bullish thesis for XRP in early 2026 is structural rather than speculative.
While price action often dominates headlines, the underlying market “plumbing” suggests that circulating supply is tightening, increasingly favoring buyers.
The most visible catalyst comes from spot XRP ETF inflows. Since the launch of the first US-listed spot XRP ETF in November 2025, these products have attracted an estimated $1.3 billion in cumulative net inflows. Early performance has largely aligned with expectations: a regulated vacuum that steadily absorbs liquid supply while signaling that institutional capital has officially entered the market.
On-chain data from CryptoQuant shows that XRP reserves on Binance have dropped to approximately 2.6 billion tokens, the lowest level since January 2024. This marks a sharp decline from the late-2025 peak near 3.25 billion XRP, representing a substantial contraction in readily available sell-side liquidity.
Historically, falling exchange reserves often indicate a shift toward self-custody and long-term holding behavior, reinforcing the supply-tightening narrative.
This trend is not limited to Western markets. Korean exchanges—particularly Upbit, a critical liquidity hub for XRP—are also experiencing accelerating net outflows. The pattern closely mirrors November 2024, just before XRP rallied from $0.50 to $3.29, strengthening the argument that supply compression may once again be forming beneath the surface.
Whale behavior further supports this view. XRP inflows from large wallets to Binance have steadily declined since peaking in mid-December. Although whales still account for roughly 60.3% of total inflows, this figure is down sharply from over 70% just weeks ago, suggesting that major holders may have completed short-term distribution and are transitioning into a re-accumulation phase.
Institutional Expansion Across Key Global Markets
Beyond market structure, Ripple continues to build genuine institutional rails across major financial jurisdictions.
In the United Kingdom, Ripple has formally expanded its operational footprint, signaling long-term commitment to London’s financial infrastructure amid increasing regulatory clarity. This move is particularly significant given that nearly 90% of crypto firms have failed to meet the FCA’s registration requirements, highlighting Ripple’s regulatory positioning advantage.
Meanwhile, in Japan, the Asia Web3 Alliance Japan has launched a startup support initiative focused on developing compliance-ready solutions on XRPL, reinforcing Ripple’s strategic emphasis on regulatory alignment in Asia.
At the enterprise level, Evernorth Holdings, backed by Ripple, announced a strategic partnership with Doppler Finance aimed at improving institutional treasury management and liquidity operations on XRPL. Unlike retail-focused updates, this collaboration targets the core infrastructure of traditional finance, laying groundwork for large-scale capital flows to operate on-chain.
The Bearish Case: A Weakening On-Chain Economy
While XRP’s supply picture appears increasingly favorable, demand at the network level tells a far more concerning story.
The core bearish thesis centers on the risk that XRP evolves into a “paper asset”—actively traded through ETFs and derivatives, but rarely used on its native ledger.
The first crack in the institutional narrative emerged on January 7, when spot XRP ETFs recorded $40.8 million in net outflows, ending a streak of consistent inflows. This episode highlights a key risk: ETF demand is not a one-way force, but a two-sided valve capable of amplifying downside pressure just as quickly as it fuels rallies.
More concerning is the dominance of derivatives over spot markets. CoinGlass data from early January shows XRP open interest reaching approximately $4.5 billion, the highest level since the October 10 market shock that wiped nearly $20 billion from crypto markets.
At the same time, 24-hour futures volume surged above $13 billion, while spot volume hovered near $3 billion. When derivatives overwhelm spot markets at this scale, price discovery becomes driven by leverage, liquidations, funding rates, and hedging activity—rather than organic usage demand. This structure leaves XRP especially vulnerable during sharp “risk-off” events.
XRPL On-Chain Metrics Continue to Deteriorate
Beneath the trading layer, XRPL’s on-chain fundamentals remain weak.
According to DeFiLlama, XRPL’s total value locked (TVL) stands at just $72.76 million, a fraction of what is seen on other high-throughput blockchains. Network revenue is equally underwhelming, generating roughly $1,000 per day in fees. While low fees benefit payments, they also indicate limited economic activity.
Usage metrics further confirm the downtrend. XRPL’s native DEX recorded daily trading volume of just $86,000 in early January, with 7-day volume down 53% to $425,000.
Monthly data from XPMarket reinforces this decline: the number of active DEX traders fell from approximately 27,900 in November to 16,700 in December, while trading volume dropped from $259.3 million to $166.2 million.
Even the rare bright spot—stablecoins—raises questions. Although stablecoin market capitalization on XRPL rose 33% week-over-week to $406 million, driven largely by RLUSD, liquidity remains fragmented. RLUSD’s total market cap has reached $1.336 billion, yet the majority of supply resides on Ethereum, not XRPL.
This suggests Ripple’s products are gaining traction—but primarily on competing blockchains where DeFi liquidity already exists—leaving XRPL as a secondary settlement layer rather than a primary liquidity hub.
What Does This Mean for XRP in 2026?
This growing divergence will define XRP’s narrative throughout 2026.
At present, XRP is trading more like a macro-financial instrument, wrapped in institutional vehicles and increasingly decoupled from the health of its native ecosystem. The signals are structurally contradictory: shrinking exchange reserves and maturing ETF products support higher price floors, while declining DEX liquidity and stablecoin migration reflect failure to convert financial interest into sustained on-chain engagement.
The year ahead will likely hinge on whether this gap can be closed.
If RLUSD adoption and partnerships like Evernorth–Doppler succeed in drawing liquidity back to XRPL, the network may ultimately justify current valuations through genuine economic activity. If not, and institutional trading continues to thrive while on-chain usage stagnates, XRP risks becoming a purely speculative Wall Street instrument—detached from its blockchain roots.
⚠️ Disclaimer
This article is for informational purposes only and represents a personal market analysis. It does not constitute financial or investment advice. Cryptocurrency markets are highly volatile. Always conduct your own research before making any investment decisions. The author is not responsible for any financial losses.
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